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Follow up on the Metalor response to the report published by the Association SPM

Follow up on the Metalor Response to the Report published by the Association SPM

Neuchatel, October 19, 2015 - In addition to formally rejecting the allegations of sourcing from illegal mining in Peru, Metalor decided to immediately launch a full review of the processes followed by Minerales del Sur SRL, since the allegations by SPM were focused on this supplier. Even though a due diligence review is done before any supplier is becoming a Metalor customer, this re-check was necessary in light of the allegations made by SPM.

The goal of that was to verify every step of the gold mineral flow from the mine to export, the documentation that is required from every miner/mine selling gold mineral to Minerales del Sur SRL, as well the controls and checks done by Minerales del Sur SRL, Metalor Peru and the Peruvian authorities till the gold mineral is finally shipped to the Metalor refining plant in Switzerland.

The outcome of that review is as follows:

1. Minerales del Sur SRL, as every Metalor customer, has gone through a thorough KYC process in order to become a supplier of the company. Such process requires compliance with AML regulations, operating and export licenses, respect of environmental regulations, conflict minerals and human rights, including the ban of child labour.

2. The process that has been followed by Minerales del Sur SRL regarding the supply of gold mineral to Metalor responds to the demands of the regulatory requirements in Peru and the Supply Chain Policy of Metalor.

3. Minerales del Sur SRL won in 2014 the Public Tender organized by the state owned company Activos Mineros SAC in order to commercialize gold mineral extracted by artisanal miners and small scale mining companies in the Altiplano region, being the Puno area part of it.

4. Minerales del Sur SRL has been supplying gold mineral to Metalor under the above scheme with Activos Mineros SAC. Due to the fact that consistent with the tender terms Minerales del Sur SRL is offering very fair conditions to the artisanal miners and small scale mines from the Puno area, the vast majority of them have decided to sell their mineral to it.

5. Under the above scheme, Minerales del Sur SRL is required to identify and document in every purchase the company name/miner, RUC or ID n°,date of the transaction, Invoice, transport bill, weight, formalization compromise registry, mining concession n°, concession name and payment method. All this information is then recorded by Minerales del Sur SRL.

6. That such information is checked by Minerales del Sur SRL with the official registry at the Ministry of Mining, and communicated both to Activos Mineros SAC and to Metalor Peru, which in turn does check again such information. Finally, all such supporting documentation is reviewed and validated together with every shipment by the Customs/ Sunat authorities at the Lima Airport before giving the green light for export.

In conclusion, Metalor reconfirms that the gold mineral supplied by Minerales del Sur SRL, as well as from any other Metalor supplier in Peru is sourced from neither illegal mining nor Madre de Dios region, being without any basis the allegations to the contrary made by SPM.